If you are waiting for stocks to go on sale, join the crowd. For the last few years nearly everyone has screamed about the market being overvalued, interest rates being too low, and how it would all come crashing down. It hasn’t happened.
We asked three contributors to Fool.com which stocks they would recommend to those who are still waiting for a pullback. They came back with MarineMax (NYSE:HZO), Zynga (NASDAQ:ZNGA), and Airbnb (NASDAQ:ABNB). Here’s why they think it’s time to buy these companies now.
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Cruising to another decade of growth
Jason Hawthorne (MarineMax): As the pandemic forced family leisure activities outdoors, one way many adapted was to get on the water. Boat sales climbed 12% year over year to a 13-year high in 2020. The percent of first-time boat buyers also rose, which hadn’t happened in more than a decade. That sets MarineMax — the world’s largest recreational boat and yacht retailer — up for success in the years ahead.
The company doesn’t just sell boats. It operates 31 marinas and storage facilities, provides brokerage and charter services, and offers insurance. Unlike boat sales, which are infrequent transactions, MarineMax’s services are generating recurring revenue for the lifetime of the boat. Even before the pandemic, management was doing a stellar job increasing high-margin service revenue. It shines through when you see how gross profit has grown faster than sales.
HZO Revenue (TTM) data by YCharts
Management has raised earnings guidance for fiscal 2021 multiple times. It originally forecast $4.10 per share at the midpoint. That would have been impressive 20% growth. It’s now calling for $6.47, or 58% growth.
The good times aren’t likely to end anytime soon. At least one manufacturer has said it could be two or three years before it catches up with demand. Wall Street doesn’t see it that way. The company is trading at a price-to-earnings ratio of 7.6. That’s the lowest it has been in years, excluding March 2020’s market collapse.
It’s why MarineMax is a great stock for investors waiting for a market crash. Despite the stock market making all-time highs, its shares appear to be dirt cheap. And the boom in boat sales will keep generating profits for years to come.
A gaming company with non-gaming upside
Jon Quast (Zynga): If you’re hoping for a market crash, I’m willing to wager that you’re looking for a bargain. However, a word of caution with so-called value stocks: Not everything that’s cheaply priced is a great business to own for the long haul. But fortunately with mobile-gaming company Zynga, you can get both quality and value right now. No need to wait for a market crash.
Zynga is a quality company for a couple reasons. First, the company had over 205 million monthly active users as of the second quarter of 2021, up 192% year over year. That’s a big jump. But this user growth isn’t a one-hit wonder — the company has shown steady…
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